Close China Ties Will Lift Malaysia’s Economy and Anwar’s Standing


KUALA LUMPUR – MALAYSIA’S new Prime Minister Datuk Seri Anwar Ibrahim was seen smiling and exuberant during his three-day official visit to China from March 30 to April 1.

This should not come as a surprise after watching TV footage that showed the warm reception and hospitality extended to the Malaysian leader by Chinese President Xi Jinping and Premier Li Qiang in Beijing.

In addition, Anwar was also looking forward to witnessing the signing of 19 memoranda of understanding (MOU) on investments worth about RM170bil from China. Among the 50 Chinese corporate giants to meet him were global top 500 companies.

Indeed, the charismatic leader’s open support for Xi’s One-Belt-One-Road Initiative, as well as his reiteration of the endorsement of the “One China” policy before President Xi and his stand against imperialism, has won the hearts and minds of the Chinese at the outset.

Anwar’s pledge in Beijing to promptly look into existing issues faced by Chinese investors in Malaysia has helped to boost their confidence in this South East Asian country.

Adding a feather to the cap, several prominent groups have vowed to make Malaysia their regional hub, Anwar announced in Malaysia.

Chinese investors – who had been cautious about Malaysia due to anti-China remarks and political instability in the past – feel more assured after meeting with Anwar, according to some Chinese nationals.

But some have already begun to look at Malaysia positively since November 2022, after Anwar said he wanted to elevate Malaysia-China relations at his maiden press conference upon assuming the premiership.

From his speeches made so far, the Chinese see Anwar as a moderate leader with a multicultural outlook, in Malay-led multi-racial Malaysia where ethnic Chinese and Indians form significant groups in the 34 million population.

It is to be noted Anwar is among the first foreign leaders to meet with Xi after the latter’s re-election as China’s President for the third term.

Malaysians generally agree that China can be tapped for fresh foreign direct investment (FDI) to uplift its economy, now recovering slowly from the Covid-19 pandemic.

Amid the raging Russia-Ukraine war, there are not many choices for Malaysia in luring FDI.

To be sure, China – the world’s second-largest economy – is seeing its Covid-hit economy rebound strongly after it reopened for business late last year.

In January 2023, the International Monetary Fund (IMF) projected China’s GDP to grow 5.2% this year.

Looking around, China’s infrastructure projects in Laos, Thailand, Indonesia and Cambodia are lifting optimism in these Asean economies.

Land-locked Laos, one of the world’s poorest nations, is seeing vitality in its economy and tourism after the China-built Kunming-Vientiane high-speed rail began operation early last year. Its GDP is projected to grow by 4% this year by the Asian Development Bank.

As China has been Malaysia’s largest trade partner for 14 years and has been advocating world peace and cooperation, it is logical to look to China.

According to Chinese statistics, total Malaysia-China bilateral trade (including indirect trade) in 2022 surpassed US$200 billion. In addition, China has been a major FDI source for Malaysia for years.

China offers abundant business opportunities

On the Chinese side, the door is now wide open for business. On March 25, President Xi reiterated Beijing’s commitment to opening up ahead of the high-level Boao Forum For Asia, in which Anwar was one of the key speakers.

It was clear Xi was sending a strong message that China will create opportunities for a world now troubled by chaos and international conflicts.

The IMF has projected China will contribute one-third to the economic growth of the world this year.

China’s current pursuit of high-standard opening-up and modernization will bring new opportunities for the development of Malaysia and other countries, Xi told Anwar at their meeting on March 31.

Anwar’s proactive diplomacy that helped to secure the RM170bil investment commitment has been the talk of the town.

“The Prime Minister has so far done a good job, given he has been in office for only four months. Once the guanxi (relations) with China is established and the trust won, we can expect more trade and investments to flow in,” said MCA president Datuk Seri Dr Wee Ka Siong, who was inside Anwar’s official delegation to China.

Among the 19 MOUs are projects on green technology and digital economy crucial for Malaysia’s economic advancement, according to International Trade and Industry (MITI) Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz.

“We are also working to improve the spillover effects to the small and medium enterprises … This will lead to an improvement of wages for more Malaysian workers, thus moving the country into a high-income nation,” he told Malaysian media while in China.

Towards the sceptics, Anwar’s roaring success is a surprise as he was known to be close to Washington and Western governments in the 1990s when he was finance minister and deputy premier under the premiership of Tun Dr Mahathir Mohamad. Back then, he was also the darling of the Western media.

Uptick in Malaysia-China relations

But the Anwar of today, who has a pool of good and experienced economic advisers behind him, could be a different thinker now.

While in China, he had stressed that Malaysia — being an independent nation — opposed bloc confrontation and would not be forced to “pick sides”.

Many see this statement as sending a message to President Joe Biden that Malaysia would not bow to US pressure to side with Washington in geopolitics.

When concluding his trip, Anwar himself described his official visit to China as “an achievement that brought about great benefits to the country and the people of Malaysia”.

The potential investments from China, which Anwar said will also be monitored by him and China’s premier, is sizable when compared to the total FDI of RM265bil received by Malaysia for the whole of last year.

If most of the proposed FDI comes to fruition within the next 12-18 months, the Malaysian economy will see light at the end of the tunnel and higher growth in sight.

Indeed, two proposals totalling RM110bil should help scale up Malaysia’s manufacturing sector.

They come from Rongsheng Petrochemical Co Ltd, which will invest up to RM80bil for oil refining in Johor’s Pengerang; and Zhejiang Geely Holding Group, which has committed RM30bil with other groups to collaborate with Proton Holdings for the Automotive High-Tech Valley in Tanjong Malim, Perak.

The commitment of these two groups is being taken seriously. And Anwar, who will personally follow up on these VIP investments, said one of them could come next month (May 2023).

Rongsheng is the world’s largest petrochemical company, in which Saudi Aramco is a 10% equity holder. And Geely is a leading auto group famed for acquiring Sweden’s Volvo in 2010 and turning the ailing group around.

Malaysia tourism to benefit soon

While the potential impact of Chinese FDI on the real economy takes time, the positive effect of Anwar’s trip on tourism can be immediate. In the May 1 to 7 golden holiday week in China, Malaysia may see an influx of Chinese tourists, as Kuala Lumpur often ranks in the top 10 favourite destinations for mainland travellers.

And lately, Malaysian food and tourist attractions have been featured in many Chinese social media posts.

Indeed, Malaysian tourism players can look forward to counting more renminbi. However, the yuan will not stream in for no reason. For many Chinese tourists and investors, the first consideration is whether the countries they plan to go to have good relations with Beijing. This follow-government behaviour is a Chinese characteristic.

In this regard, Malaysia has nothing to worry about. Anwar and his team at the International Trade and Industry Ministry have laid the foundation for optimism.

As a guest of the Chinese government, Anwar has played his role well. Among the many remarks he had made in China that must have pleased his host were: Malaysia views China as a trade partner and does not see the rise of China as a threat, and Malaysia hopes to learn from China’s success in eradicating abject poverty.

While meeting with Xi, the Malaysian leader also stated that China’s Global Security Initiative, Global Development Initiative and Global Civilization Initiative echoed Malaysia Madani – a policy framework that focuses on good governance and sustainable development announced by Anwar soon after he became premier.

While noting China’s recent success in brokering the Iran-Saudi Arabia dialogue in Beijing, Anwar praised China for playing a constructive role in promoting global peace.

During the friendly meeting with Anwar, the Chinese President emphasised that China is willing to work with Malaysia to support the core position of Asean, rejecting the Cold War mentality and camp confrontation.

According to Xinhua News, Xi noted that 2023 marks the 10th anniversary of the China-Malaysia comprehensive strategic partnership, and next year will mark the 50th anniversary of diplomatic ties.

Xi said their meeting on March 31 “would undoubtedly open a new chapter in the history of the China-Malaysia relationship.”

In Beijing, Anwar and Xi “agreed to vigorously advance” high-quality Belt and Road cooperation, cooperate in the digital economy, green development, new energy and other areas, so as to bring tangible benefits for the two countries and their people, Xinhua reported.

Proposal on Asian Monetary Fund

While the opening remarks of leaders were widely reported, what was not reported from March 30 to April 1 was the proposal by Anwar for Xi to take up the leadership in setting up the Asian Monetary Fund (AMF) – a new structure similar to IMF whose policies are influenced by the US.

This proposal on AMF, which Anwar announced to the Malaysian Parliament after his return, has hit world news as it came amid some recent trade deals to ditch the US dollar by Russia, China, India, France and the Middle East.

Anwar said Xi welcomed further discussions with him on this AMF idea.

“There is no reason for Malaysia to continue depending on the dollar,” he said, adding Malaysia’s central bank is working on enabling the two nations to use the ringgit and yuan for trade deals.

If the AMF is endorsed by China, Asean and most other key Asian key players, then the US dollar supremacy in the region will be weakened. Anwar may earn regional respect and play a greater role on the international stage.

Anwar also reported to the Malaysian Parliament he had raised “sensitive issues” with President Xi.

It is obvious these are meant for the ears of his critics and nationalistic Malaysians. Building closer Malaysia-China ties can face challenges as there are racist groups and people suspicious of China in the country.

Anwar told Parliament he had asked Xi to use his influence to help resolve the political upheaval in Myanmar, and added the crisis has resulted in Malaysia having to house 200,000 Rohingya refugees. As Rohingya are Muslims, Malaysia’s Malays are generally sympathetic towards them.

On the overlapping sovereign claims with China on parts of the South China Sea, Anwar appears to go for peaceful dialogue, like his predecessors. He said: “Malaysia is open to talks over China’s claim on oil and gas in the South China Sea, even as oil and gas exploration by Petronas is being carried out.”

As Anwar has extended invitations to Xi and Li to visit Kuala Lumpur next year to celebrate the 50th anniversary of Malaysia-China diplomatic relations, it is clear Anwar wants to deepen bilateral ties further for the benefit of the country and the stability of the region.

And come next year, it should not be a surprise if more FDI and tourists from China stream into Malaysia.

Source: Asia News